ATLANTA — The CEO of a metro Atlanta-based real estate firm is accused of running a $300 million Ponzi scheme impacting more than 2,000 investors, funding a "lavish lifestyle" that included the purchase of a $3 million yacht.
The U.S. Securities and Exchange Commission announced Thursday it had obtained a preliminary injunction and asset freeze against Drive Planning LLC founder and CEO Russell Todd Burkhalter. The firm was based at the Avalon in Alpharetta.
The SEC filed a complaint in the U.S. district court in Atlanta alleging that from 2020 to June of this year, Burkhalter "raised more than $300 million for purported real estate investments, telling investors their money would be used to fund land development projects" only to steal those funds to live a life of luxury, "including to buy a $3.1 million yacht and spending $4.6 million on chartering private jets and luxury car services and $2 million on a luxury condo."
According to the SEC, the scheme involved promises of investment returns of 10% interest every three months. Burkhalter and Drive Planning is accused of encouraging investors "to tap their savings, retirement accounts, and even open lines of credit to invest."
"In reality, the defendants did not have a business capable of generating the promised returns, and they instead used investor funds to make Ponzi-like payments," an SEC release stated.
The complaint alleges advertising brochures for the investment scheme required $20,000 minimums from investors to participate.
“Drive Planning and Burkhalter gained the trust of everyday people and encouraged them to invest in this scheme by promising exorbitant returns, but as our complaint alleges, the defendants’ business was nothing more than a classic Ponzi scheme, using new investor money to pay returns to existing investors, with Burkhalter stealing millions to fund a lavish lifestyle,” said Nekia Hackworth Jones, Director of the SEC’s Atlanta Regional Office, in a statement. “Investors should be vigilant when they encounter aggressive sellers who make over-the-top sales pitches and promise high rates of guaranteed returns.”
Burkhalter is charged with violating antifraud provisions of federal securities law. The complaint says he pledged on June 10 of this year to cease accepting new investments as well as paying commissions or "supposed returns" to investors, but indeed paid sales commissions to Drive Planning agents as late as June 21.
"Moreover, Burkhalter remains a signatory on bank accounts containing millions of dollars of investor funds and has recently entered into a divorce settlement pursuant to which he may transfer to his spouse property bought with investor funds" the complaint, arguing for the asset freeze, asserted.
The complaint lays out how Burkhalter began offering a "bridge loan opportunity promising 10% in three months" under what are known as "real estate acceleration loan," or REAL, investments.
"Burkhalter and the agents he recruited to sell REAL represented to prospective investors that Drive Planning would pool their money and loan it out to property developers, and/or enter into joint ventures with property developers, and thereby generate the profit necessary to meet obligations to REAL investors," the complaint states. "But the interest from property developers in doing business with Drive Planning proved insufficient, and Drive Planning had no other profit-generating enterprises sufficient to meet obligations to REAL investors, each of whom expected a ten percent return every 90 days."
You can see the full complaint below.